good afternoon and welcome to prime interest i'm harry and boring in above english a good six days headline. so if you're going to fight the fad do it legislatively today a twenty two year old bangladeshi man was sentenced to thirty years for attempting to blow up the new york federal reserve building his cell phone was ample traded by the f.b.i. who supplied him with one thousand pounds of fake explosives according to the justice department the attempted bomber asserted the plan was his own and that is goal was to quote destroy america by targeting its economy no evidence was introduced in court of him scoping out the new york stock exchange he eventually chose or help to choose the new york fed itself and it is the london whale simply john corps minus slash m.f. global readouts two stories are being floated in the media today the first by bloomberg regards j.p. morgan which is negotiating with regulators over the derivatives debacle that cost

the farm over six billion dollars according to quote people mr diamond's firm will likely get off with only a fine or a slot and according to sources the london will himself will not face u.s. charges so why the possible john corazon redux the media was repeatedly used as a tool to float the idea that would walk free and now we have this london will story doesn't have nearly the grassroots movement that a global did but members of congress don't like angry phone calls or answering them and bed bob hogs fake econ staff of former assistant treasury secretary paul craig roberts and i profiled purdue pharma and here's what they hear prime minister.

despite massive debts the us is now able to borrow at record low rates thanks in part to quantitative easing it is a world of disc information and misinformation and which facts are fiction and abstract theories are substituted for empirical reality not unlike the movie the matrix in which an entire population lives in an alternate reality now those are the thoughts and words of paul craig roberts who i spoke with earlier he is the author of the failure of laissez faire capitalism and former assistant secretary of the us treasury so i first asked him about the federal reserve expansion of the monetary base. create that many new dollars you threaten the dollars exchange value and lo and behold the gold price was taking off and nineteen hundred dollars an ounce and that signaled to the federal reserve that the dollar's

exchange rate of return says would be collapsing and so in order to in order to keep reading the bond market they had to start reading the gold market they rigged the gold market by going in and selling neck and shorts they don't tons and tons non-existent go paper shorts in the market at the worst possible times of day in order to drive down the price so to say to save the quantitative easing they have to rig the gold market and another consequence all the quantitative easing is the stock market and stock market has been moving it's it's very high and it's all based on the fact the bed is creating enormous amounts of money and the money that goes into the bikes in exchange for bonds mortgage backed securities for example goes into the stock market. so we now know three bubbles on

stocks and dollar and that is the financial matrix and that's how it's rigged now if you are an investor where you're going to invest. you're going to go into markets that depend entirely on the fed printing of thousand billion new dollars each year so you don't know where to go no where to go and what's what's the future when the fed is it looks like they're going to taper at the end of the year what happens when the largest marginal bond buyer gets out of the market. yes well they can't take it because if they do the price is the bonds will fall which means interim interest rates will rise the stock market crash the banks will again be insolvent. and so they can't there's trapped how do they get out of it they can speak about tapering. but remember now they're tapering

they have made that conditional on the. united states connery achieving a certain growth in certain unemployment rate. but the only way the unemployment rate is falling is because people who can't find jobs drop out of the workforce they're no longer counted as out of my lord so so it's really a tragedy i don't i expected some kind of just blow up and i don't think they can troll it well i'd like to talk about unemployment in a second but first let's get to some of the modern metrics our politicians are using to so-called steer the economy and we actually have a clip here of a famous politician opining on the relative worth of national accounting statistics . not in a particular county. and think about average i. am going to play highway. account back

a lot of hard boiled and mchale the people of great. so of course i was robert kennedy and he was talking about g.n.p. that would be gross national product and under the first bush regime we suddenly started following gross domestic product or g.d.p. so why the change. well all the criticisms that robert kennedy made the gross national product also applied to gross domestic law now the reason they change that is their gross domestic product excludes the trade about imports and exports which are included in the national crop and because the united states has such a huge trade deficit moving from g n p g d p makes growth look higher because it excludes the loss from the trade deficit you know if any your trade deficit is a subtraction. from the gross national product. it's not

a subtraction from gross domestic product so that's why they made the ship that makes it look like your county is stronger or growing higher so are any of these national accounting identities that were pretty much invented in the mid one nine hundred forty s. by keynes himself are they valuable in any way. i don't think so any longer because like robert kennedy emphasized increasingly for corporations they're called star x. terminal there they are social cause they're imposed on the environment and those don't third parties for example the large dead zone in the gulf of mexico. they're the product of the runoff from chemical agriculture farming. and the cost of those dead zones is not included in the.

cost of the farming or the price of the farm products so the whole trouble with these accountings systems is they don't include the external cost of production. and they they don't really include the use of nature's resources the only natural resource cost associated is extraction cost. but you see the resources used up and there is that's a cost it's not included and and the pollution of the air the warmer the land this is not included so you would have to say that the measure of g.d.p. greatly only states the value of production in fact it's entirely possible that there are many economic activities today in which the cost that is the the

social cost exceed the value of the output if they're not included so as soon not measured we can't tell whether you're an increase in production is really a good thing or a bad thing yeah and it seems like g.d.p. is almost an it's an aggregate of apples to oranges comparison then one could almost argue that were it not for the fact that the government produces the statistic itself and people react to it how valuable would it be in a free market but i do want to move on here to unemployment because in the twenty first century the jobs created by the world's largest economy have been lowly paid non tradeable domestic third third world service jobs so how how are we going to improve the situation. well you can't unless you can bring the middle class manufacturing engineering jobs such as software jobs back to the united states on india and china and the other lower wage countries where they were

moved you see what what globalism is it's simply labor arbitrage and wall street and the large american retailers pressed the corporations to move their production for american markets all shore where labor costs floor and the retail stores hope to get lower prices out of that and wall street look to get more profits and so what's been going on in the twenty first century is that the american economy is being simply empted of employment opportunities the jobs are moved offshore and with the jobs go and the tax base the careers the consumers incomes and so there's nothing to drive the economy you can't have a consumer economy if you take the consumers jobs and you give them to the chinese and then the ins and then you bring the goods that the chinese and indians may back

to the united states to sell to the consumers who haven't got good jobs and so the economy hasn't gone anywhere in the twenty first century initially the federal reserve on the alan greenspan compensated for the lack of growth in consumer income by creating a credit bubble in other words the low interest rates let people refinance their homes it's been the activity and that kept the economy going until everybody drownded in debt right and now there's nothing that can get the economy going i just want to get one more question and you're right about the american people who have been placed outside the system of democratic capitalism is democratic capitalism and it's careful. arme sustainable or does it inevitably devolve into some kind of tyranny. yes i think it. is but an unregulated capitalism. ends up being you know. run by

a few people. it's what we see today you know wall street runs treasury runs the financial regulatory agencies it runs the federal reserve so once you think that deregulation free market deregulation is the answer and we have pursued that now for a quarter of a century both here in england in france indeed just about all over the world the net result is that our accumulates into fewer and fewer hands and so you have an oligarchy in the crowds out the markets. that was my interview with paul craig roberts off of the failure of laissez faire capitalism also former assistant secretary of the us treasury coming up area and profiled produce pharma and their pimping of the opiate oxy caught that they got them in a trouble and she explains how their multibillion dollar asco is leading to more

deaths in suburbia then i do will be always outspoken mark levine over a favorite mortgage giants fannie and freddie and also get into some of the nitty gritty of greenspan and bernanke used it to loosen interest rates. is the main competitor girl on the market is mother nature. may customers struggle with to. fight for each drop from an interview supply and. let people think i hear prices

purer want to. lie on our teeth. they use it up there and wash their hands. and flush their toilets when the same one. that's nice is selling and spring water. it's like you. have you with us you're an art teacher day on roll researcher.

one drug commonly used in major us metropolitan cities is now found and rural suburban towns i'm talking about heroin use is dangerously addictive drug has crept its way into many middle class homes the face of the addict has turned to more affluent people and some of the most unlikely to become smacked users according to the substance abuse and mental health services administration the number of people who say they've used heroin in the past year jumped fifty three point five percent to six hundred twenty thousand between two thousand and two and two thousand and eleven the number of fatal overdose heroin deaths also increased fifty five percent from two thousand in the us that number comes from the center for disease control and prevention as well documented that many heroin users turn to the illegal drug

after being prescribed synthetic heroin for pain relief also known as opioids according to open medicine it since one thousand nine hundred seventy retail sales of prescription opioids have increased six hundred fifty percent actually code on is leaving. in this industry sadly fatal overdoses involving prescription opioids is following the trend according to the c.d.c. prescription painkillers are the leading cause of accidental deaths in the u.s. and april two thousand and eleven the white house declared prescription drug misuse and abuse an epidemic heroin used to be widely prescribed in the u.s. but it was pulled from the markets around the one nine hundred twenty s. because of its highly addictive nature today hair one has made a comeback in the form of oxy kowtowed a synthetic opioid that purdue pharma holds a patent on in the u.s. oxy cotton is their f.d.a. approved cash cow over fifteen years sales for oxy cotton have exceeded twenty

billion dollars over you i've used to be reserved for chronic cancer pain but in the late one nine hundred ninety s. produced pharma would on an aggressive marketing campaign to get oxy cotton prescribe for a wider pain management produce distributed videos to doctors across the country to encourage widespread prescribing of the drug. there's no question the best strongest pain medicines opioids but these are the same drugs that have a reputation for causing addiction and all the terrible things we don't do is we're wrong in thinking that opioids can't be used long term they can be and they should be we used to think they'd stop working all the patients would become addicts or they'd be sedated interconnectivity these six cases show how wrong those views were when pain treatment is successful study successful. but what wasn't successful was produced branding of the drug in two thousand and seven purdue

pleaded guilty to misleading the public about oxy cottons risk of addiction and agreed to pay six hundred million dollars making it one of the largest pharmaceutical settlements in the us history three the top producer executives also plead guilty said ms branding and faulty marketing of the drug. however six hundred million dollars is nothing compared to the billions of dollars in sales the drug has brought in now states are trying to hold the pharmaceutical company accountable first in line the bluegrass state kentucky supra do pharma in two thousand and seven seeking reimbursements of money spent on law enforcement drug treatment programs and medicaid prescriptions the suit is still open as police in kentucky blame oxy cotton for hundreds of deaths and millions of dollars in costs to the state canadians have also filed a class action lawsuit against purdue is seeking roughly three hundred fifty million dollars for a negligent distribution and marketing of oxycontin pretty who has taken steps to

rein in the abuse of the drug last year they changed the formula of oxy cotton making it more difficult to inject or snort the new england journal of medicine says this is why abusers are switching to heroin the street drug can be more lethal than the prescription drug because dealers mix it with other ingredients as more people switch to heroin the medical community expects overdoses to increase yes the story is sad and the numbers are staggering as difficult to find someone who hasn't been affected by drug abuse in america but the billions of dollars spent on heroin use and treatment is nothing compared to the trillions of dollars the fat is pumping into the financial veins of our economy which affects everybody and like our financial system doping can only be as absolutely fatal to weigh in on this and other issues please follow me on twitter at perry and r.t. now let's get to the daily.

oh roy joining me is host of the. inside scoop mark levine let me ask you something how long have you been in the broadcasting business about ten years now i had an edge on me but i have these things called facts so let's get to her first i don't need the cheat sheet i don't already go make me look better already this week fifty minutes to ten billion dollars second quarter profit of partially due to surge in home prices meanwhile on tuesday president obama laid out a plan to wind down both mortgage giants fannie and freddie so would this be the same freddie that led to a collapse in the housing market i'm glad that president obama did such a great job in bailing them out they're not only going to pay every penny that they borrowed they make substantial profits and the best part is the american taxpayer

owns eighty percent of freddie mae and freddie that's how that happened that would never have happened were enough for the federal reserve buying over actually over a trillion dollars worth of those securities the market was tanking and were it not for the federal reserve's manipulation of interest rates we would have never had paying all this money back it gets to moral hazard so what do you think about the moral hazard involved and to me look i've always argued that we shouldn't have things that are too big to fail fannie mae and freddie mac. were private enterprises like. countrywide frankly. well they were completely private remember they've been private since nine hundred sixty eight they're only public now because they were bailed out by president obama ok but in a they were private in the sense that you could buy shares in them but also the public government was backstopping and no you know you don't know if you look any securities you bought from fannie mae and freddie mac. said very clearly u.s. government is not backing any of this with the way they did it and they actually ended up backing them and at the last minute no more than a i.g. no less than a i.g. also a private private company that actually did

a lot worse than fannie mae and freddie mac. yes they did but the federal reserve was buying agency bonds that would be freddie and fannie and freddie agency for instance in one nine hundred ninety nine so that fred had already given support i don't think china would have bought all those bonds in the first place had the fed not been active in the market so to say that they were private enterprise i think is a false misconstruction here's the heart of it the end of the day. we're getting all the money back and we're making a profit which shows that it was a good idea to bail them out now should we have anything too big to fail in the future no we should and that's why as you know i support the dodd frank regulation bill that's why i think that all of these entities private and public need to be regulated so they're not to big to fail the future i agree that we shouldn't have too big to fail but how did we get here in the first place ok let's talk about how we got here in a very quickly we got here because the republican congress got rid of regulations they got rid of glass steagall i'd say get rid of the bucket shop laws that have been around since the early one nine hundred that prevented you from gambling on other people's things look if i buy a house insurance all right and i have a fire i get coverage but i should be able to bet on whether your house burns down

or bet ten times or whether your person here house burns down because i might have an incentive to burn your house down ok those are two separate argument so let me get to glass steagall first first if we have to live with the banking system that we have i'm all in favor of that wall are we going to get that wall again i doubt it unless there's another financial crisis but then what was your second point my point is you should get a bet on other people's mistakes the whole point of insurance the whole point of hedging is to protect yourself like i said like fire insurance what credit derivative swaps did is you know it let you bet on other people's mistakes so goldman sachs could sell these terrible terrible collateralized debt obligations to people at the same time as they bet against the same things they were selling that kind of betting and that kind of non regulated capitalism that is the cause of the crisis spending made freddie mac. they jumped in no question about it they jumped in late they jumped in much smaller than everybody else and frankly they are partly to blame but very very small part to blame well i would say that a lot of the blame gets back to the federal reserve because when you look at studios and the derivatives market seven hundred trillion dollars back up to the

pre-crisis levels c.d.o. didn't make up that big of a part its interest rate swaps and other things those are the things that are going to detonate the system in the future and getting to the point of should you be able to bet on other people's houses i think it's a non sequitur because the reason we have this seven hundred trillion derivatives market in the first place is because the fed has been giving away free money for over a decade now the reason we have history. these markets because wall street has found that this is a fancy way to act without regulation you know why they call quid rid of swaps and not insurance which is really what they are or did because swaps weren't regulated this was this new word created by some brilliant guy and merrill lynch i'm going to call it swaps because that's not sure if that's not banks the federal deposit insurance corporation has had a very good job at regulating banks that's why we haven't seen a run on the treasury with that we need to exact same thing a federal mortgage insurance corporation make sure that non-banks have the same regulations this won't happen again i don't think we're sitting here i think the so let's what are we ever i don't know let's move on to the kinetic america's wealthiest are stashing their cash according to

a survey by american express publishing the harrison group the top one percent of americans save thirty seven cents for every dollar and this is triple the savings rate of the top one percent in two thousand and seven so interest rates are already is near zero we've been talking about this what do you think about cash hoarding it seems to me that obviously the rich have so much cash that they have no place to put it look the top one percent earn eleven percent more each year in the last three four years while the bottom ninety nine percent which is the vast majority of us lose money year after year we have a system let's face it that rewards the super rich at the expense of everybody else that's what that's what barack obama's been arguing for a long time we need to tax the rich more fairly so that the money gets distributed more fairly cross the public ok but how does the money get there in the first place how do we how come we've seen this huge disparity in wealth grow throughout the years is it because of lax regulations i mean is that partly the heart of it that you know basically we've just been giving money away to corporations we've had a crony capitalist system and some of these corporations them selves are almost too

big to fail and a lot of these defense contractors like g.e. derive a significant portion of their income from you know the federal government look i'm not going defend corporate welfare i've been opposed to corporate welfare all the time i've been in politics but the heart of the problem is is that if you're a middle class family and you have a small business and you do badly at the business you fail you lose. business but if you're truly rich you can ruin a company that had the stock price decreased by two thirds and still go out with hundreds of millions of dollars in bailout that's not capitalism the way it should be it goldman sachs went to jail or lost a lot of money that would be keep people from making these kinds of mistakes in the future well here's the moral hazard argument that goes to the bailout and everything else is that when the government picks winners and losers it does hurt the small businesses and that's the final word i'm afraid we're out of time thank you much so much for joining me if you want to weigh in on today's show be sure to like us on facebook at facebook dot com slash prime interest you can follow mark here at mark levine talk and you can follow follow me it was p.r.i. thank you so much for joining me on today's daily do it my pleasure bob.

and it was an aggressive day on prime interest the man who tried to fight the federal service thirty years better than mine and the feds are battling it j.p. morgan and the london whale mr excel except not the only kentucky and hammer that said pretty pharma for reckless marketing that cost needless lives and paul craig roberts questioned the legitimacy of our favorite econ stats i think gross disputed product and forget dueling bob went to war with mark levine over capitalism itself so thanks for watching and come back on monday from everyone at prime interest i'm sorry and boring you have

a great weekend. what defines a country's success. faceless figures of economic growth. or a factual standard of living.